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Accounting Terms D-I

Accounting Terms D-I

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Items (94)

  • Using the price of merchandise purchased last to calculate the cost of merchandise sold first

    Last-in, first-out inventory method (LIFO)

  • Recording uncollectible accounts expense only when an amount is actually known to be uncollectible

    Direct write-off method

  • The 12-month period ending June 30th of the prior year that is used to determine how often a business must deposit payroll taxes

    Lookback period

  • Using the price of merchandise purchased first to calculate the cost of merchandise sold first

    First-in, first-out inventory costing method (FIFO)

  • Total liabilities divided by total assets

    Debt ratio

  • The decrease in equity that results when a plant asset is sold for less than book value

    Loss on plant assets

  • A form describing the goods or services sold, the quantity, the price, and the terms of sale


  • A form prepared by the customer showing the price deduction taken by the customer for a return or an allowance

    Debit memorandum

  • A letter issued by a bank guaranteeing that an individual or business will be paid a certain amount if stated conditions are met

    Letter of credit

  • Obtaining capital by issuing stock in a corporation

    Equity financing

  • Goods or services shipped out of a seller's home country to another country


  • The process of paying a partnership's liabilities and distributing remaining assets to the partners

    Liquidation of a partnership

  • A ledger that contains all accounts needed to prepare financial statements

    General ledger

  • A type of accelerated depreciation that multiplies book value by a constant depreciation rate to determine annual depreciation

    Declining-balance method of depreciation

  • Someone who owns, operates, and takes the risk of a business venture


  • The difference between assets and liabilities


  • The operating revenue remaining after cost of merchandise sold has been deducted

    Gross profit, gross profit margin

  • A form for recording transactions in chronological order


  • The length of time for which a business summarizes its financial information and reports its financial performance

    Fiscal period, Accounting period

  • The payment of payroll taxes to the government


  • A right granted to an individual or business to sell the products or services of another, larger business within a defined area


  • A comparison of one item on a financial statement with the same item on a previous period's financial statement

    Horizontal analysis

  • The date on which a business issues a note, bond, or stock

    Issue date

  • An asset that does not have physical substance

    Intangible asset

  • A computerized cash payments system that transfers funds without the use of checks, currency, or other paper documents

    Electronic funds transfer (EFT)

  • Information for each transaction recorded in a journal


  • Obtaining capital by borrowing money for a period of time

    Debt financing

  • A bank form which lists the checks, currency, and coins an account holder is adding to a bank account

    Deposit slip

  • Financial rights to the assets of a business


  • The area of accounting which focuses on reporting information to external users

    Financial accounting

  • Using the lower of cost or market price to calculate the cost of ending merchandise inventory

    Lower of cost or market inventory costing method (LCM)

  • An amount paid for the use of money for a period of time


  • Net income after federal income tax divided by the number of outstanding shares of stock

    Earnings per share

  • An amount owed


  • An entry recording the receipt of cash before the related revenue is earned, or payment of cash before the related expense is incurred


  • A declining-balance rate that is two times the straight-line rate

    Double declining-balance method of depreciation

  • A comparison between two components of financial information

    Financial ratio

  • A written, signed, and dated order from one party ordering another party, usually a bank, to pay money to a third party

    Draft, Bill of exchange

  • The cost of goods or services used to operate a business


  • Financial reports that summarize the financial condition and operations of a business

    Financial statements

  • A form used during a physical inventory to record information about each item of merchadise on hand

    Inventory record

  • The period of time during which a customer may take a cash discount

    Discount period

  • Gross profit as a percent of net sales

    Gross margin

  • Recording transactions in a journal


  • The standards and rules that accountants follow while recording and reporting financial activities

    Generally accepted accounting principles (GAAP)

  • A journal amount column that is not headed with an account title

    General amount column

  • An increase in equity that results when a plant asset is sold for more than book value

    Gain on plant assets

  • All expenses other than direct materials and direct labor that apply to making products

    Factory overhead

  • Not making payments on a loan when they are due


  • The retail price listed in a catalog or an Internet site

    List price

  • The actual count of merchandise at the end of a fiscal period

    Ending inventory

  • Earnings distributed to stockholders


  • A business form used to record details of an employee's earnings and deductions

    Employee earnings record

  • Cash receipts and payments involving the sale or purchase of assets used to earn revenue over a period of time

    Investing activities

  • Cash received for goods or services that have not yet been provided

    Deferred revenue, unearned revenue

  • A group of accounts


  • A bank card that automatically deducts the amount of a purchase from the checking account of the cardholder

    Debit card

  • The interest earned on money loaned

    Interest income

  • The ability of a business to use borrowed funds to increase its earnings

    Financial leverage

  • A financial statement showing the revenue and expenses for a fiscal period

    Income statement

  • A list of assets, usually containing the value of individual items


  • The portion of a plant asset's cost that is transferred to an expense account in each fiscal period during that asset's useful life

    Depreciation expense

  • The relationship between dividends per share and market price per share

    Dividend yield

  • Anything, or any process, that is protected by patent, trademark, or copyright

    Intellectual property, intangible asset

  • A decrease in equity resulting from activity other than selling goods or services


  • Liabilities owed for more than a year

    Long-term liabilities

  • The payment of an employee's net pay using electronic funds transfer

    Direct deposit

  • An accountant who combines accounting and investigating skills to uncover or prevent suspected fraudulent business activity

    Forensic accountant

  • The principles of right and wrong that guide an individual in making decisions


  • A loss in the usefulness of a plant asset as a result of wear or obsolescence


  • Cash receipts and payments involving debt or equity transactions

    Financing activities

  • The procedure for arranging accounts in a general ledger, assigning account numbers, and keeping records current

    File maintenance

  • A signature or stamp on the back of a check transferring ownership


  • Financial statements providing information for a time period shorter than the fiscal year

    Interim financial statements

  • The date by which an invoice must be paid

    Due date

  • A ratio that measures the ability of a business to pay its current financial obligations

    Liquidity ratio

  • A bank loan agreement that provides immediate short-term access to cash

    Line of credit, credit line

  • Processes and procedures employed within a business to ensure that its operations are conducted ethically, accurately, and reliably

    Internal controls

  • Goods or services shipped into the buyer's home country from another country


  • The recording of debit and credit parts of a transaction

    Double-entry accounting

  • A check that a bank refuses to pay

    Dishonored check

  • A qualified retirement plan that provides most individuals with a deferred federal income tax benefit

    Individual retirement account (IRA)

  • Interest accrued on borrowed funds

    Interest expense

  • Action by a board of directors to distribute corporate earnings to stockholders

    Declaring a dividend

  • An increase in equity resulting from activity other than selling goods or services


  • A note that is not paid when due

    Dishonored note

  • A journal with two amount columns in which all kinds of entries can be recorded

    General journal

  • An amount recorded on the left side of an account


  • A federal tax paid by employers to administer the unemployment program

    Federal unemployment tax (FUTA)

  • The operating revenue remaining after the cost of merchandise sold and operating expenses have been deducted

    Income from operations, operating income

  • The percentage of the principal that is due for the use of the funds secured by a note

    Interest rate

  • Payments for goods or services which have not yet been received

    Deferred expenses, prepaid expense

  • A partnership financial statement showing net income or loss distribution to partners

    Distribution of net income statement

  • A negative balance that remains after total expenses are subtracted from total income